“Earn to give” is a stupid idea.
I don’t say that to be insulting.
I’m using the word in the technical sense my friend Doug Casey does: “Stupidity is an unwitting tendency to self-destruction.”
In this sense, earn to give is stupid, and worse, it’s counterproductive for society.
I’ll tell you why, but let me give you some context first.
Earn to give is a notion espoused by Sam Bankman-Fried (SBF), a young ex-billionaire currently in the headlines for the implosion of his cryptocurrency exchange company, FTX. Before the collapse of his company last week, he was known for his stated intention to give essentially all the money he makes away.
His idea is not just to give after earning or give because he earns more than he needs, but that the reason to earn is to give.
In other words, he claimed to be motivated by altruistic feelings, not the profit motive.
(In my experience, people who claim to be motivated by such purely altruistic motives usually turn out to be con artists, but that’s actually beside the point.)
The reason this is stupid is that millennia of observation tell us that apart from the occasional Mother Teresa, human beings are mostly selfish most of the time.
Centuries of economic data certainly show this is so, in aggregate.
Adam Smith explained how the manifest selfishness of humanity serves the public good in his foundational work on economics, The Wealth of Nations. It’s as though people are moved by an “invisible hand” such that their self-interest creates greater prosperity overall.
Businesses need the profit motive to be effective—and that helps everyone.
Societies need businesses to be effective to create the wealth and progress that has lifted countless millions out of abject poverty.
Sure, there are nonprofit organizations that attempt to address issues the for-profit sector does not (directly). But while many are solid, going concerns—both liquid and solvent—they don’t usually make money on their operating activities. They don’t create wealth; they spend it. So, even if one believes that most of these organizations are doing great work (a belief anyone with experience in the sector questions), they still need the profit motive to create the wealth they apply in pursuit of their good deeds.
A business can’t be run this way—not for long.
Placing profit anywhere but front and center dooms any business from the get-go.
It might work if all men and women were angels, motivated entirely by infinite love for others… but ours is not a species of angels.
Or it might work if we lobotomize everyone to make them like obedient, hard-working ants. Ants serve their colonies to the death. There are no selfish, rebel ants. But destroying all that makes life worth living in order to help us have a “better” life is self-defeating. Ant people would never invent music or know love.
There is, however, a bigger picture here.
Let’s set aside the dismal record most charities have for squandering wealth without making any measurable difference in the world…
Dissipating wealth is in and of itself destructive.
Or, let me put it this way: creating real progress requires great wealth. Therefore, dissipating wealth slows progress.
Let’s make this abstraction concrete.
Love him or hate him, Elon Musk is building a system of giant, reusable rockets to make our species interplanetary.
Whether one thinks this is a worthy goal is not important to the points I’m making.
The fact that he’s doing so at a profit supports my point about businesses needing the profit motive to be effective. SpaceX’s current fleet of reusable rockets is a spectacular success. Compare that to the lack of achievement of pro-space nonprofit organizations that have existed for decades longer than SpaceX—or even the glacial pace at which NASA moves. QED.
But Musk needed to be a billionaire before he could get SpaceX going. A garage-based startup would never have worked.
This is the second point I’m making: Elon’s accumulated wealth enabled him to accelerate progress in the space industry in ways that were impossible for anyone else.
Well, Jeff Bezos is working on cheaper access to space as well, if at a much slower pace. He now says he wants to give away his wealth—maybe that's why his Blue Origin space venture seems so sluggish compared to SpaceX. Regardless, he too had to become a billionaire before taking on such tasks. This only underscores my point.
Now, suppose Musk and Bezos had followed an earn to give business plan…
I’m sure their previous businesses would have failed and they would not have the capital to push the world into the future as they are now doing.
The same goes for Bill Gates advancing the next generation of nuclear power.
And by the way, it’s been the accumulation of wealth throughout history that funded the creative geniuses who gave the world its greatest works of art.
Quick aside: I’m not saying any of this excuses ill deeds by the super-rich. It’s irrelevant to my case here, but I believe in justice and accountability—for everyone.
Another quick aside: I know that businesses can become destructive predators. Addressing this is beyond the scope of this essay, but it’s my view that this is usually the result of corruption and criminality. Where the rule of law is healthy and strong, the profit motive forces businesses to serve others, delivering as much value as they can—and progress too. Where the rule of law is weak, businesses can seize the machinery of the state to coerce others and harm society.
What I’m saying today is simply this:
- Earn to give is a bad business idea that prevents the creative good businesses can do in pursuit of profit.
- Worse, earn to give dissipates wealth instead of concentrating it so it can be put to great constructive use.
Inversely, it was imagining that businesses could be run effectively by brotherly love instead of the profit motive that made Russian cars among the worst in the world during the Soviet era. It also produced mass shortages—those famous lines for toilet paper—and impoverished the entire nation.
Rejection of the profit motive was the fundamental error that doomed the Soviet Union from the start.
Earn to give as a core value might sound nice, but it really is stupid for a business—and every person’s life is arguably their own main business.
That’s my take,
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